2025 Supreme(Online)(APTEL) 59

APPELLATE TRIBUNAL FOR ELECTRICITY
Ramesh Ranganathan, Chairperson, Seema Gupta, Technical Member
Singareni Collieries Company Limited – Appellant
Versus
Telangana State Electricity Regulatory Commission – Respondent
APL No. 256 OF 2024 & IA No. 880 OF 2024 & IA No. 920 OF 2024 & IA No. 794 OF 2025 | Appeal No. 19 of 2025

The premium on coal price under a Bridge Linkage is part of the 'landed cost' of fuel. The Electricity Regulatory Commission lacks jurisdiction under the Electricity Act to deny this cost as a pass-through in tariff, as coal pricing is the domain of the coal company.

Headnote:

(A) Electricity Act, 2003 - Sections 61, 62, 86(1)(a), 86(1)(b), and 86(1)(f) - TSERC (Terms and Conditions of Generation Tariff) Regulations, 2019 - Regulations 21.6, 21.8, and 21.9 - Interpretation of the term “landed cost of fuel” - The word “include” / “inclusive of” in Regulation 21.8 is a word of extension and makes the definition enumerative, not exhaustive; therefore, the premium charged by a coal company on the price of coal supplied under Bridge Linkage is part of the “price of fuel” and thus part of the landed cost of fuel for the generating station. (Paras 57-74, 80)

(B) Electricity Act, 2003 - Jurisdiction of State Electricity Regulatory Commission - The State Commission, as a creature of the statute, can only exercise powers expressly conferred by the Electricity Act, 2003. It does not have jurisdiction under the Electricity Act to determine the price of coal or deny a premium charged by a coal company, as the fixation of coal price is the prerogative of the coal company under the Colliery Control Order, 2000. (Paras 84-87, 91-92)

(C) Electricity Act, 2003 - Prudence Check - While the State Commission is empowered to conduct a prudence check on cost components for tariff determination, in the absence of any specific provision in the Act or Regulations governing the price of coal, it cannot substitute its own view for the price fixed by the coal company, especially when the price (including premium) is uniformly applied to all consumers and has been left to the coal company by the Ministry of Coal. (Paras 81-85, 92)

Facts of the case:
The appellant, a government-owned coal mining company, established a thermal power plant (STPP). A coal block was allotted to the STPP, but due to delays, a ‘Bridge Linkage’ was granted by the Ministry of Coal for the STPP to source coal from the appellant itself. The appellant supplied coal to the STPP and charged a premium over the notified base price, as per a Memorandum of Understanding (MoU). The Respondent Discoms challenged this premium before the State Commission. The State Commission, in its first order (Impugned Order 1), held that the premium was not permissible and directed the appellant to stop levying it. However, in a subsequent tariff order (Impugned Order 2), the same Commission allowed the premium as part of the energy charge rate. Cross appeals were filed against both orders.

Findings of Court:
The Appellate Tribunal held that the power to fix the price of coal vests with the coal company under the Colliery Control Order, 2000. The Ministry of Coal, while granting the bridge linkage, left the determination of the coal price to the appellant. The ‘landed cost of fuel’ under Regulation 21.8 of the TSERC Regulations is not exhaustive and includes the total price paid for the fuel, which encompasses the premium. The premium was not arbitrary as it was uniformly charged to all other beneficiaries under bridge linkage. The State Commission has no jurisdiction under the Electricity Act to regulate the price of coal itself. Therefore, the premium paid is a legitimate pass-through in the energy charge rate. The State Commission’s contradictory stands were erroneous.

Issues: 1. Whether the word “include” in Regulation 21.8 of the TSERC Regulations, 2019, defining “landed cost of fuel,” is exhaustive or enumerative, and whether it includes the premium charged on coal price under Bridge Linkage. 2. Whether the State Electricity Regulatory Commission has the jurisdiction under the Electricity Act, 2003, to determine or deny the premium charged on the price of coal supplied under a Bridge Linkage by a coal company to its own generating station. 3. Whether the State Commission’s Impugned Order 1 (denying the premium) and Impugned Order 2 (allowing the premium) can sustain.

Ratio Decidendi: The court ruled that the word “include/inclusive of” in Regulation 21.8 is a word of extension, ordinarily making the definition illustrative and not exhaustive. Therefore, the “landed cost of fuel” encompasses all costs incurred by the generator to bring fuel to its doorstep, including any premium legitimately charged by the coal company. On the issue of jurisdiction, the court held that the State Commission’s powers are confined to the Electricity Act, 2003, which does not confer upon it the authority to regulate the price of coal, a matter that falls within the domain of the coal companies under the Colliery Control Order, 2000. The Commission cannot, through its tariff determination or regulation, supplant the price set by the coal company when the Ministry of Coal has explicitly left it to the coal company to decide.

Result: Appeal No. 256 of 2024 (filed by the coal company) was allowed, and Impugned Order 1 (denying the premium) was set aside. Appeal No. 19 of 2025 (filed by the Discoms) was disposed of, with the issue of R&M expenses (the ‘K-factor’) being remanded to the State Commission for fresh consideration. All associated IAs were also disposed of. (Paras 94-95)

JUDGMENT

(PER HON’BLE MRS. SEEMA GUPTA, TECHNICAL MEMBER, ELECTRICITY)

1. Appeal No. 256 of 2024 has been preferred by M/s Singareni Collieries Company Limited (“SCCL”) assailing the order dated 01.04.2024 (hereinafter referred as “Impugned Order 1”) passed by the Telangana State Electricity Regulatory Commission in OP No. 13 of 2023 wherein premium charged by SCCL to its STPP for the coal supplied under Bridge Linkage was denied. Appeal No. 19 of 2025 has been preferred by Southern Power Distribution Company of Telangana Limited and Northern Power Distribution Company of Telangana Limited (hereinafter referred as “Telangana DISCOMs”) assailing the order dated 28.06.2024 (hereinafter referred as “Impugned Order 2”) passed by the Telangana State Electricity Regulatory Commission (hereinafter referred to as “State Commission/TSERC”) in OP No. 4 of 2024 wherein State Commission has trued up the financials of “SCCL” for FY 2022-23 and approved MYT for control period FY 2024-25 to FY 2028-29 wherein premium charged by SCCL to its STPP for the coal supplied under Bridge Linkage was considered.

2. The issues involved in both the appeals are connected and are sort of cross appeals, they are being disposed of with this common judgment. The facts in these appeals are not in dispute. Therefore, for the sake of convenience, the description of the parties is given hereunder as per Appeal No. 19 of 2025.

3. Appellant No.1- Southern Power Distribution Company of Telangana Limited and Appellant No.2-Northern Power Distribution Company of Telangana Limited are the Distribution licensees, and are entrusted with the function of distribution of electricity in their respective areas of operation in the State of Telangana and collectively referred here- in-under as Telangana Discoms.

4. Respondent No. 1, the Telangana State Electricity Regulatory Commission is the Electricity Regulatory Commission for the State of Telangana exercising powers and discharging functions under the provisions of the Electricity Act, 2003. Respondent No. 2- M/s Singareni Collieries Company Limited (“SCCL”) is a coal mining company incorporated under the Companies Act, 1956.

FACTS OF THE CASE

5. The facts that are necessary and required for disposal of these appeals are narrated below in nutshell.

The SCCL entered into the business of power generation by establishing a 2X660 MW coal based thermal plant i.e. Singareni Thermal Power Plant (“STPP”), in which Unit I&II achieved COD on 25.09.2016 and 02.12.2016. The entire power generated from STPP is to be sold to the Telangana DISCOMs at a tariff determined by State Commission under the Power Purchase Agreement (“PPA”) dated 18.01.2016. The PPA was to remain valid for a period of 25 years from the COD of the last unit i.e. Unit II.

6. In order to meet the coal requirements of STPP, SCCL was allotted NAINI coal block in the State of Odisha. Since it was anticipated that coal production from NAINI coal block would commence in December 2020, as an interim measure, until the operationalization of the coal mine by SCCL, STPP applied for and obtained Bridge Linkage, the short term linkage for a fixed period of three years, from the Standing Linkage Committee of Ministry of Coal. The initial Bridge Linkage was granted for the period between 13.08.2015 to 12.08.2018 from the SCCL and pursuant to obtaining the Bridge Linkage, SCCL executed a Memorandum of Understanding (MoU) dated 01.11.2017 with STPP setting the price structure for coal to be supplied. While the PPA dated 18.01.2016 contained Annexures III & IV which provided for computation of variable charges based on coal price to be as decided by SCCL , the State Commission by its Orders dated 22.10.2021 in O.P. No. 08 of 2016, directed that the above clauses to be deleted and replaced as under:

“For any billing month, the variable charges shall be determined as per TGERC Regulations”.

7. An amended PPA was entered on 22.05.2024. STPP upon achieving COD of Unit I on 25.09.2016 and Unit II

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